Accrued Purchase Accounting

Accrued purchase accounting in BV allows you to reconcile your inventory to your general ledger on a monthly basis. In order to do this, two switches need to be turned on in System Setup:

1. System Setup, Inventory, Inventory Setup – Post Inventory Adjustments to the G/L must be checked

2.System Setup, Purchase Order, Purchase Order Setup – Close PO’s to A/P must be checked

Below are the steps involved in purchasing items, receiving and paying them, and the impact it has on the general ledger.

1. Issue purchase order – no general ledger impact.

2. Receive goods

Dr. Inventory

Cr. Accrued Purchases

3. Record the vendor invoice

Dr. Accrued Purchases

Cr. Accounts Payable

The credit to Accrued Purchases when the goods are received cancels out the debit to Accrued Purchases when the invoice is received.

Steps to follow:

Issue the PO  – same as always

Receive the PO – same as always, except that now the journal entry to debit inventory and credit Accrued Purchases will post. Whether the person receiving the goods sees the journal entry or not depends on the user setup.

Record the Vendor Invoice

In BV, go to the purchase order;  the PO number is normally noted on the vendor invoice.

If the cost on the invoice is the same as the cost on the purchase order, there is no issue.

If the cost on the invoice is significantly different and you want the inventory value to be accurate, you need to first un-receive the goods at the issued cost, save the purchase order, and then re-receive them at the correct price.

One the PO cost is correct, Click on the ‘Invoice’ icon at the top of the page.

Enter the actual vendor invoice.

Enter the freight, which in included in the invoice total, as stated.

Enter the invoice number

Enter the invoice date.

The entry will be automatically posted in A/P, as it was before.

If the value of the invoice is not the same as the amount that was accrued (the value received) then the system will post the difference to the adjustment account (specified in Special Accounts)

Partial receipts are easily accommodated. It’s convenient if the vendor invoices correspond to each partial receipt, but it is not necessary.

The system will ask if you would like to close the purchase order.

Select No if there are more receipts and/or invoices expected.

If all items are fully received and all invoices have been received, then select ‘Yes’. This removes the PO from the open Purchase Order list and records it in PO history.


In the reporting suite, Purchase Order, you will see a standard report called ‘Accrued Payables List’. This will list all open purchase orders which have been received but not closed. (It does not list PO’s that are only Open or Issued.)

For each PO, the report lists the Issued Amount, Accrued to Date, Invoiced to Date, and Outstanding Accrual.

The Outstanding accrual should equal (or almost equal) the g/l account for Accrued Payables (for each currency). Any discrepancies should be investigated.

At the end of every month, print the Stock Status Summary and compare it to the General Ledger balance. Make adjustments if required and investigate large or unusual differences.


You should only move to Accrued Purchase accounting at the beginning of a new month. Vendor invoices for goods received before the changeover date must be posted to A/P directly; only vendor invoices for goods received after the changeover date should be posted via the Purchase Order.

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